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Local Search has Arrived, or Has It?

Most online marketers agree that paid search has arrived with a bang. National advertisers, agencies, and local merchants are integrating search into marketing programs at unprecedented rates. Salomon Smith Barney projected an earth-shattering 40% revenue growth rate for Paid Search from 2001 to 2002.

But is paid search applicable for local advertisers?

There is certainly a declared need for relevant local content for users, and advertisers want to reach these local shoppers in the most efficient means possible—with a search engine. However, this group appears to be struggling with local aspects of constructing and delivering search results.

Google and Overture, along with several other search providers, have recently announced plans to produce some derivation of local search services. The sheer tonnage of recent mainstream press relating to the big paid search results providers heading in the direction of local search provisions has advertisers asking questions. The illustrious Joseph Jaffe commented recently on the power of such press in Pondering the Press. Big, ubiquitous national brands with thousands of local dealers want to get their arms around some of that Internet Advertising. As with all new questions about marketing on the Web, it seems hype is the answer.

Why is it important to deliver a locally oriented search program, and more immediately, how can advertisers execute such an initiative?

Dioramic

In a perfect world, I am sitting in my den in Greenwich, CT using a search site to find a law firm. I enter “lawyers” in the search box and up pops the firm Dewey, Cheatem, and Howe located in downtown Greenwich. The search engine knew my location and intuitively returned this firm, which is paying $1.30 per click for me to action its listing. This may seem a bit like science fiction, but big providers are heading in this direction.

The question begs itself: Isn’t there an efficient means for getting local merchant information now? Sure, sites that go local include city guides (CitySearch, Digital City) and Internet yellow pages directories (SuperPages.Com, YellowPages.Com). The former provides geographic proximity related content, the latter depicts “where to buy” information. Both accomplish their respective tasks very well, which leaves just one small problem to address.

Why?

Staring me in the face again this month in Overture’s March 2003 newsletter was the December ‘02 DoubleClick (the other Kevin Ryan) survey for which the company measured how U.S. users found Websites when researching a purchase. The top two answers were: Search Engine (41%) and Guessed URL (28%). Combine that data with other reports placing search at nearly the top of Internet users’ activity lists and voila, the need for a search site to have a local provision is born.

It doesn’t require the assistance of Dr. John Nash to figure out the math here. Search sites are banking on revenue projections that fall in the vein of local telephone directory advertising sales, with similar delivery strategies. For example, this would require a provider to sell 1,000 ad units to local merchants in a given Market Statistical Area (MSA) generating $100 in revenue, each. One of the problems facing big search sites is they do not have the trusting relationship telephone directory publishers have with local merchants. Worse, they don’t have the large premise and telesales infrastructure to reach these advertisers.

Advertisers of local paid search content fall into two very distinct categories: national, regional brands with local sales channels, and local merchants with no larger affiliation. In either case, you must begin with understanding the local merchant mindset since funding for any advertising will most likely come from this budget.

The Kelsey Group, a Princeton, New Jersey-based research firm, has been doing just that since 1999. “We have several research initiatives that have been executed with the goal of better understanding attitudes and behaviors of small to medium sized local businesses with Websites,” reports Neal Polachek, Vice President. In the most recent survey, local businesses were asked what was most important to them. The lion’s share responded with needing assistance in being found. Interestingly enough, the number of respondents indicating a need for help with search results fell from 54% in 2001 to 40% in 2002. Polachek attributes this to a process of self-learning and adoption. Given the large growth numbers of small businesses that utilize the services of Google and Overture, this drop is not surprising. Local merchants also tend to be less educated in marketing and techno babble, so ad models will have to be kept simple.

Quandary

It never fails. Thirty-eight seconds after big search site CEO mentions to the press his site plans to accommodate local search (advertisers), some poor schlep (like me) receives a call from the bread and butter client asking for a plan of action by day’s end. Rather than battle through the cacophony of bold quotes and explain that reading the article as opposed to the headline may lead to a much happier day for all of us, we proceed.

All too often, we as online marketers find ourselves in the unhappy position of being required to make something happen long before any practical applications have been tested and executed. At times like this, I defer to what Jim Collins (Built to Last, Good to Great) calls “The Stockdale Paradox”. Collins is referring to one Admiral Jim Stockdale’s description of a central survival tactic in his eight-year imprisonment in the “Hanoi Hilton”, a Vietnamese camp for POWs during the Vietnam War. Admiral Stockdale never lost faith that he would survive this ordeal, but he had the courage to face the brutal reality of his current situation. In this instance, the brutal reality is that a paid local search program today will consist largely of key terms or phrases, with a local modifier.

Many paid search advertisers have programs that contain hundreds, even thousands of search terms with specialized messaging elements for each term, or groupings of terms. In researching keywords for a locally orientated paid search plan you can simply add geographic specific terms to an already monstrous list of keywords to address the needs of the user-initiated proximity search. Problem solved, right? Not really.

Another Kelsey group report indicated that a mere 10% of all searches contained a local keyword or phrase. Why don’t we start with the relatively benign search term, Hotel? The good people at Overture Services report that in the month of February, there were exactly 1,293,421 searches for our word. Our hotel is in the great state of Connecticut, which was searched a paltry 5,622 times by comparison. But wait, the hotel we need to send traffic into is in Westport, which was searched 653 times. Leaving aside issues of measurement and asking the property manager to assist the management of said search initiative, expanding a program of this type to include hundreds of locations in as many cities is an administrative nightmare, but possible.

Catharsis

New resources to help along the way are beginning to arrive. CitySearch has executed a product that is search-driven and click-performance based for local businesses. Local merchants can bid for placement within relevant keyword searches. While this product falls outside the realm of traditional search (Google, Overture ilk), CitySearch has reported that adoption rates are strong, and revenue has increased exponentially in test markets.

Atlanta based SME Global Solutions (www.smeglobalsolutions.com) has developed a quantifiable search traffic sales model for local merchants that aggregates local search terms and packages them in a no-brainer sales kit. “We have taken a lot of the hype out of search,” reports “Kirsten Mangers, founder, and chief strategy officer. “It is simply a matter of executing a tool that when a local search is conducted the relevant products or services offered by the merchant are found.” SME has achieved success by partnering with larger telephone directory publishers to capitalize on the existing sales infrastructure. If you can’t beat ‘em, join ‘em.

Large paid search providers are reluctant to speculate as to when geographic models will graduate beyond beta. In the short term (no pun intended), online marketers will have to rely on grass-roots strategies for sending search traffic into local content sites while the industry begins to sort itself out.